As 2024 ends and 2025 begins, AI remains the cornerstone of growth in the semiconductor sector and driving increased demand for foundry services. However, Donald Trump’s return to office on January 20, 2025 creates potential uncertainty. The administration’s policies could cause inflation and a cooling economy, consistent with an expected downturn in the semiconductor market cycle. This further complicates the outlook under the Trump 2.0 administration.
According to World Semiconductor Trade Statistics (WSTS), the global semiconductor market is expected to grow 19% year-on-year in 2024 and 11.2% in 2025. AI continues to be a key driver of this expansion. The AI-related logic and memory chip sectors are expected to see double-digit growth. In contrast, other semiconductor segments are expected to achieve more modest single-digit gains.
AI servers will surpass smartphones and notebooks as growth drivers in 2024
The downstream market reflects this trend, with AI servers leading the way with strong double-digit growth. By comparison, smartphones and notebooks are expected to see only single-digit growth.
AI remains the dominant force shaping 2024, with generative AI driving rapid growth across technology sectors and strengthening momentum in the semiconductor industry. This trend is likely to continue until 2025. Industry leaders such as TSMC and Nvidia are poised to gain significantly as top manufacturers of AI computing chips. .
Semiconductor cycle: historical patterns and an AI-driven recovery in 2024
As 2025 approaches, the cyclical pattern in the semiconductor industry remains clear. The previous boom lasted about 25 months from mid-2019 to mid-2021, and was driven by increased demand for home appliances and PCs during the coronavirus pandemic and efforts to replenish inventories. Ta.
The ongoing recovery phase, which began in the second quarter of 2023, is still less than 20 months old. Global semiconductor sales in 2024 are expected to increase year-over-year, driven by a surge in demand for AI computing driven by generative AI and an increasing need for memory chips and electronic devices such as smartphones and PCs. I am.
Note: Calculated based on revenue changes for upstream, midstream, and downstream semiconductor companies.
The demand for AI servers continues to increase, and cloud training and inference AI chips are in their early stages of rapid growth. As AI spreads from the cloud to edge computing, demand for consumer electronics such as smartphones and PCs increases, while also driving the growth of cloud infrastructure.
TSMC, a leader in advanced manufacturing, is outpacing the growth of the semiconductor industry. In the third quarter of 2024, TSMC’s revenue is expected to grow 36% year over year, well below the industry’s average growth rate of 4%.
TSMC has emerged as the biggest beneficiary in AI chip production. Major AI chip manufacturers (Nvidia, AMD, Qualcomm, MediaTek) are expected to maintain strong growth in cloud training chips and mobile SoC products through 2025.
Geopolitical tensions and China’s semiconductor push are reshaping global supply chains
However, the ongoing US-China tensions pose geopolitical risks and add uncertainty to the semiconductor industry’s cyclical pattern.
US sanctions against China’s semiconductor industry have been tightened, accelerating China’s push for self-sufficiency. Domestic demand for substitute products is increasing. Over the past few years, the world’s foundries have significantly expanded and peaked their production capacity in China. The release of new capacity over the past two years has increased supply and is expected to continue through 2025.
Governments around the world are competing to attract large foundries to reduce risks from regional trade conflicts. Meanwhile, Chinese electronics manufacturers are increasingly opting for locally produced parts to avoid potential trade tensions.
European companies such as STMicroelectronics, NXP and Infineon are increasingly interested in sourcing wafer manufacturing from Chinese foundries, benefiting major companies such as SMIC and Shanghai Huahong Group.
The localization of China’s industrial chain is expected to deepen further in 2025. Localized wafer manufacturing in China is expected to drive sustained demand growth as geopolitical tensions rise and Chinese electronics manufacturers strengthen their foothold.
